Complexity Theory and the Failures of Neoliberal Development in Ghana

Within the practice of international development, a few theories have stuck around long enough to be recognized as mainstream: among those are Modernization Theory, Dependency Theory, Neoliberal Development (through Structural Adjustment Programs), and so-called Post-Development Theory. A newcomer to the practice is called Complexity Theory, hailing not from the social sciences as previous theories often have, but from evolutionary biology and computational modeling. This results in a much broader, much different focus for the theory, one where Amartya Sen's Capabilities Approach, or concerns about Good Governance (hailing from Neoliberalism), are seen – at-best – as parts of the solution, and not mere contingencies that improve development outcomes (Manson). It's a young theory in development, and thus not without criticisms leveled against it. In this paper I will outline what Complexity Theory is, how useful it is in development (both theoretic and applied), as well as what criticisms have been leveled against it. Finally, I'll finish with an applied example of complexity theory suggesting better solutions than Neoliberal development did, in the failed case of water privatization in urban Ghana.

Complexity Theory hails from evolutionary biology (and has applications in things like weather modeling), and as such is a little different of a beast from previous development theories. It's based around the idea that the world is one big complex-adaptive system – meaning that at all large levels of analysis (communities, corporations, institutions, governments) systems will evolve in response to changing conditions in their environment, in a similar way to how Charles Darwin proposed species evolve. Just as with Darwin's model for evolution, individuals (corporations, people, particular development organizations) do not evolve – rather industries or systems as a whole do. Unlike Darwin's theory, however, we can harness that evolutionary process and accelerate it with careful guidance. In complexity theory, you evolve a new institution to replace an old one, letting the old one collapse in the process. This is called "creative destruction", and is a core part of what makes complexity theory effective – removing detritus from the system. All of these evolutionary processes take place simultaneously, and so each industry's changes are in response to other industries' changes, reverberating through the system. This large-scale evolution in response to other evolutions is called co-evolution, and is another core part of complexity theory.

As we expand out the implications of these two things, a few properties of complex systems emerge: They're complex beyond comprehension, and thus unpredictable on a micro scale. A small problem in one area may cause large problems elsewhere via network effects. A large, targeted intervention in a small area of a country may have disastrous, and unknown, side effects elsewhere.

A second property of complex-adaptive systems is that they have emergent properties – that is properties which are built into the system, such that they cannot be separated or reduced. Within Complexity Theory, development is considered an emergent property – that is, it will happen whether or not we undertake Development. This also means that unless we're careful about how we undertake Development, it can have disastrous consequences.

A third property is somewhat in contravention to the first point, but at a different level – that complex-adaptive systems are broadly predictable. It's illustrative that you can predict where a river might flow in the next few years, but not where a drop of water dropped in that river will end up.

A fourth property is that complex systems tend towards greater complexity. Over time, a complex system adapts to changing conditions by creating additional answers to problems, and adaptations that are not good enough or not efficient enough are lost due to creative destruction. This results in increasing complexity, but not a significant decrease in efficiency.

A fifth property is that complex systems do not tend towards equilibrium. There are only moments of stability or calm before disruption happens (we'd call it innovation) that obsoletes an entire mode of doing things. (Barder)

Taken together, these properties lead to some stunning conclusions about how Complexity Theory views development: That it's probably impossible to know the full extent of any targeted intervention, but that we can know what broad changes to a community/industry/region/nation-state will do. Additionally, development will happen whether or not we undertake Development (but we can accelerate the evolutionary process!). Directly copying institutions that work in the west to anywhere else will not work, because the infrastructure which can be assumed to be present in the west may not yet be present in an underdeveloped area. Complexity Theory, when interpreted through this lens, leads us to undertake infrastructure- and capacity-building programs instead merely of infusing cash into an economy for more "jobs" or a higher GDP, though both of these things will follow.

Criticisms leveled against Complexity Theory are wide, and not fully addressed due to its young age within the practice of development. There are two primary criticisms that stick out: because complexity theory is widely used in some hard sciences (and as previously mentioned, computational modeling), it has been adapted in each scenario to be slightly different (to match the needs of the application), but depending on which of these branches you use as your model, vastly different results are produced (Manson, p. 406). This criticism is well taken and accurate, and appliers of Complexity Theory must be cognizant of where their conceptualization of it originates, and what the specific needs of that branch of Complexity Theory were. The branch used in this paper has already been modified for use in Development by Owen Barder (who likely uses modifications sourced from other academics before him).

The second critique leveled against Complexity Theory is that it's very easy to fall into the trap of determinism that Complexity Theory (as applied in other fields) does (almost) nothing to dissuade. Determinism is when you think you can state with certainty that given preconditions X, Y, and Z, M will happen (p. 407). This is the same category error that modernization theory makes. Determinism in Complexity Theory stems from its evolutionary biology roots, and like the previous criticism, is something that must be actively avoided by the practitioner of Development.

Criticisms aside, Complexity Theory is still wonderfully useful as both an analytic and applicable tool in Development. I mean not to merely state this, but to show it by analysis of a recent (failed) example of Neoliberal development in Ghana.

In the early 1990's the Ghanaian government acted to increase the number of people who had access to sanitary drinking water. At the time, four of five deadly diseases in Ghana were water-borne, and only 35% of the country had access to sanitary water (World Bank Profile – Ghana). Yeboah cites three major political-economic reasons why privatization was initially decided upon: 1 – budgetary pressures on Ghanaian government associated with an exploding population and World Bank led structural adjustment programs; 2 – an interest in "greater competitiveness and a quest for efficiency" by deregulation; and 3 – the search by the transnational capitalist class for new markets and revenue sources, which water was a brand new example of, at the time (Yeboah, p.53). One of the reports Yeboah cites as evidence supporting this reasoning, laid out all of the internal restructuring necessary for the Ghana Water and Sewage Corporation (GWSC) to drive down both water prices and make the investments being made in increased access (at the time) more efficient. In the same breath the report suggests "private sector participation in Ghana's urban water" (p.53). This is where Neoliberal Development steps in, at the behest of Ghanian elite decision-makers, which Yeboah describes as having a Euro-centric mindset. Interestingly, 93% of urban Ghanaians had access to clean water at the time, whereas only 40% of rural people did (p.53). This is contradictory to what is being suggested (privatization of urban water, to increase access). The company which was awarded the water distribution contract (the only profitable part of water services) between 2001 and 2006 was a joint venture called "Aqua Vitens-Rand", between Dutch "Vitens" and South African "Rand" water corporations. The contract (originally supposed to be 25 years for unit A and 10 years for unit B, but terminated after 5) was split between urban and rural water delivery respectively, which is to say profitable and unprofitable. The Ghanaian government was wholly responsible for new investment (always by foreign loan, increasing their foreign debt load), while the joint-venture was responsible for producing, distributing, and maintaining these systems, which is a comparably easy list of tasks (Yeboah, p.55). This entire contract structure was drawn up by foreign firms with foreign experts, and only one local expert was involved (who supported this outsourcing of capital and private restructuring). "This rural-urban dichotomy in Ghana's effort at private sector participation in its water sector seems to have been conditioned by the World Bank, on behalf of global capital, to make Ghana's offer attractive" (Yeboah, p.56). Ghana dumped the contracts in 2006 and went back to its previous policies.

So the problem here, from Complexity Theory's perspective, is several: rather than public capacity building, like Ghana was doing during the 90s when they had such a successful water system, they bowed to World Bank and International Monetary Fund pressure and privatized urban water distribution, which negatively impacted both access to- and quality of- service. A private corporation's interests do not align with the underdeveloped set of services in this case, so it's a bad match. Ghana's government, had it kept on the same path and not bowed to WB/IMF pressure, would not have lost 5 years of water program development.

Additionally, Ghana violated one of the core properties of complex-adaptive world system, which is that they attempted to import a model of resource governance which works in the west, but for which the infrastructure is not yet built in Ghana. Indeed that was quite literally the point here, to build further infrastructure, and it failed. Creative Destruction is instituted, and the project was canned.

In an alternative ending, Complexity Theory would have had this to offer Ghana: Continue the water development programs that were already being done, and embark on other capacity-building programs. These would have cost money that Ghana likely didn't have (hence their choice to take the loans from the IMF and WB), but part of the reason that Ghana took the loans in the first place was outside pressure mixed with Euro-centrism on the part of Ghana's elites. To expand this process to other parts of Ghana's development programs, outside assistance should be brought in to create incubators, not unlike Silicon Valley's technology ones, to help accelerate the evolution of programs and investments that create necessary infrastructure for future development. Some incentive system for innovators would also be a fantastic win, and paired with outside aid to fund the best solutions, would have led to a very quick build-out of critical infrastructure in the country. This aid, incubators, funding, and all, would have to have been no strings attached. Indeed, being the outside force getting in on the ground floor like that would have been advantage enough in the marketplace Ghanaians would create.

References

Barder, Owen. (2012, May 15). Complexity and innovation in development. Retrieved May 14, 2014, from link.